Protecting Yourself from Identity Theft and Tax Fraud
Identity theft remains a significant concern for taxpayers and the IRS, with the problem potentially worsening in the coming weeks. As summer approaches, identity fraud could peak, following the trend observed in 2024 when consumers reported most identity fraud incidents during the summer months when spending is typically high.
According to the Javelin Strategy & Research 2025 Identity Fraud Study, consumers lost a total of $27.2 billion in 2024 due to identity fraud, marking a 19% increase from the previous year. This rise in fraud, encompassing new-account fraud, account takeover fraud, and existing card fraud, may be attributed to an increase in cyberattacks and data breaches, particularly those involving cloud service providers and data brokers.
To help you avoid becoming a victim, here are 15 essential tips:
-
Be cautious with public Wi-Fi: Avoid using unknown or unstable Wi-Fi networks, and consider using cellular data or a VPN when connecting to public Wi-Fi. Save sensitive activities like online banking for when you’re on a secure connection.
-
Secure private documents: Don’t be careless with credit card statements, bank receipts, and copies of tax returns. Securely file the copies you need to keep and shred the ones you don’t.
-
Keep your mailing address current: Notify your financial institutions, credit reporting agencies, and tax authorities when you move to prevent your mail from falling into the wrong hands. You can update your address with the IRS by filing Form 8822 or using your new address on your tax return.
-
Monitor your bank and credit card statements: Regularly check your accounts for suspicious activity and report any unauthorized transactions immediately.
-
Be mindful of the information you share online: Only provide necessary information when making purchases or signing up for newsletters, and check the website’s privacy policy to understand how your data may be shared.
-
Use smart passwords: Create secure, unique passwords for different sites, and consider using a password manager. Update your passwords regularly and avoid using variations of the same password.
-
Enable multi-factor authentication (MFA): Add an extra layer of security to your online accounts by using MFA, which requires both a password and an additional step, like entering a code from your phone.
-
Be cautious with games and memes: Be wary of games or memes that request personal information, as they could be attempts to gather data for identity theft.
-
Avoid phishing scams: Be cautious of unsolicited emails that ask you to click on links or provide personal information. Verify the authenticity of emails and websites before sharing your data.
-
Protect your Social Security Number: Be cautious about sharing your Social Security Number, and only provide it when necessary. Companies often request it as an identifying number, but it’s not always required.
-
Monitor your credit report: You’re entitled to one free credit report annually from each major credit bureau. Review your reports to ensure there are no unauthorized transactions or credit requests.
-
Set up fraud alerts: Many banks offer fraud alerts for suspicious transactions. Ask your bank if they provide this service and take advantage of it.
-
Freeze your credit: You can freeze your credit with the three major credit reporting agencies to prevent unauthorized access. This is free and doesn’t affect your credit score.
-
Create a fraud alert: Consider setting up alerts for transactions on your bank accounts and credit cards to be notified of potential fraud.
-
Designate a trusted contact: Some financial institutions allow you to designate a trusted contact who can be notified if suspicious activity is detected in your account.
Even with these precautions, remember that everyone is vulnerable to identity theft. If your data is compromised, act quickly to mitigate any damage by contacting your financial institution, freezing your credit if necessary, and filing a complaint with the FTC at identitytheft.gov. If the identity theft involves your taxes, respond immediately to any IRS notice and complete Form 14039, Identity Theft Affidavit, if necessary.
